Mundo Bitcoin: The mechanics of why Apple Pay won't work against bitcoin

By Victor Hernández

Apple Pay won't work as full replacement for credit cards and it certainly won't work against bitcoin adoption.

The reason for this is because Apple Pay is designed for a very constricted usage, financially and physically, due to the mechanics of paying with a smartphone using Near Field Communications, as Apple Pay does.

Consider the following:

You go to a nice restaurant. Nothing expensive. Just a nice, local restaurant. You order food, you eat, and you ask for the check. The waiter brings it to you.

In most restaurants in the US you will be delivered a leather booklet with the check inside. The booklet has a sleeve for your credit card so the waiter can take the check to the register, swipe your card and then bring you back the card and a voucher for you to sign with the check's total plus tip.

You sign your voucher, you take your copy, and you leave.

Now lets try the exact same scenario with Apple Pay.

You ask for the check, the waiter brings you the booklet, and then you tell him you want to pay with Apple Pay.

This will generate two possible scenarios:

A. The waiter will tell you to go to the register to pay your check because they only have one NFC terminal... at the register. If you're out on a date, that's not exactly romantic.

B. The waiter will bring you a remote credit card terminal with a NFC sensor so you can tap your phone and pay for your ticket.

Both of these scenarios are actually common in Mexico for credit card payments at Denny's style restaurant chains. Either you go to the register and pay your check there, or the waiter brings you a card terminal. But they are not that common in the US.

And at nicer restaurants you won't go to the register. The waiter will swipe your card at the register or swipe your card at your table.

With Apple Pay the waiter can't swipe your card at the register. The only way to pay is bringing you a card terminal with a NFC sensor.

How many restaurants are going to get remote terminals for Apple Pay? Difficult to say. Specially if that means having to spend more money on a terminal that only a fraction of smartphone users are going to use.

Now consider the same restaurant scenario with bitcoin.

You get your check, the waiter brings it to you, the restaurant accepts bitcoin and you ask to pay with bitcoin.

The waiter will then bring you a either a tablet or a paper QR code for you to make your payment.

You scan the code with your phone, you send the coins and you're done.

"Wait. Doesn't the restaurant have to spend money on the tablet in order to accept bitcoin? How's that different from spending money on an NFC terminal?" you may be wondering.

Not necessarily. The restaurant can simply give the client a paper QR code and monitor the transaction from the register. And if the restaurant were to spend a couple of hundred bucks on a tablet, it would be a better investment than the NFC terminal, since every single smartphone user can make payments with bitcoin. Only iPhone 6 users can pay with Apple Pay.

NFC terminals can probably be added to cash registers at fast food restaurants, supermarkets and other places where you have to wait in line to pay. But here's the thing: merchants can also accept bitcoin with an NFC terminal.

For example: lets suppose a merchant were to accept bitcoin through Coinbase. The NFC terminal would signal a Coinbase app to pay X amount in bitcoin. Since Coinbase makes off-chain transactions between user accounts, the NFC-enabled phone would simply receive the transaction information and then signal Coinbase to pay.

OR...

The NFC terminal will simply send the merchant's bitcoin address to the phone's wallet of choice so the phone can make the transaction and send a signal back to the NFC terminal telling the merchant the transaction was successful.

(A moot point, however, since you can pay by scanning a QR code without the need for NFC.)

All of this means two things:

1. You can't use NFC for every single payment because of the mechanics involved in the payment process. It breaks the mood at a nice restaurant during a date, for example.

2. You can't keep bitcoin away from NFC. In the end, people will realize they don't need to use a credit card and Apple Pay will ultimately fail.

Apple Pay is a final, sad and desperate attempt at keeping people from abandoning credit cards for digital currency. It will only last as long as people are willing to use credit cards. But when people realize they can use NFC and bitcoin together, Apple Pay will no longer be needed.

PS: There is another thing Apple Pay doesn't  cover; online purchases on your computer. Bitcoin does.


Get FREE BITCOIN. Click here.

The best place to buy and sell bitcoin is COINBASE. Sign up here.

This column accepts donations in bitcoin at this address:
1N5h1CZsM4rKbuQGHuP62EuPzCk7AaCpBs